New housing loan interest rates at highest since 2009

By Amy Su / Staff reporter

Tue, Dec 25, 2012 - Page 14

The average interest rate on new housing loans from five leading banks hit its highest level in nearly four years last month, 1.905 percent, the latest report by the central bank showed yesterday, signifying heavier financial stress for new-home buyers.

The Bank of Taiwan (台灣銀行), Taiwan Cooperative Bank (合作金庫銀行), Land Bank of Taiwan (土地銀行), Hua Nan Commercial Bank (華南商業銀行) and First Commercial Bank (第一銀行) made NT$41.78 billion (US$1.43 billion) in new housing loans last month with an average interest rate at 1.905 percent, the central bank said in a report.

The 1.905 percent level marked the highest since January 2009, which saw a 2.041 percent average interest rate.

Chen E-dawn (陳一端), deputy head of the bank’s economic research department, attributed the rate’s rise to the five banks’ strategy to “increase prices to limit quantity,” because the quota of housing loans they are allowed to undertake is limited by the Banking Act (銀行法).

Chen said he expected the average interest rate of housing loans to increase further next year.

In terms of loan volume, the NT$41.78 billion in housing loans posted last month was up by NT$1.64 billion from October, with NT$8.9 billion coming from a government loan scheme providing housing subsidies for young people, data showed.

Meanwhile, transfers of house ownership in major cities last month also showed a rise from October, with transfers in Taipei surging 21 percent to 3,500, in line with the trend in new housing loans, Chen said.